Ongoing Excavation Activity (as of December 31st, 2014)
Activity description: Excavation - w/5 Basements
% Completed: 94%
According to the Lebanon Real Estate Sector Research of Bank Audi, issued on the 17th of September 2014.
“ LINGERING SLOW DEMAND IN A MARKET SEARCHING FOR TANGIBLE CONFIDENCE SIGNALS
- Persistent property demand lull tied to local and regional uncertainties
Lebanon's property market has been witnessing sluggish demand throughout 2013 and so far in 2014. The local political tensions and occasional security drifts, coupled with lingering uncertainties in neighboring countries, have anchored the wait-and-see attitude of realty investors. The real estate sales value declined by 2.4% last year from an already low base before rising by 9.7% in the first seven months of this year amid more positive signals sent by government formation and security plans implementation early in 2014. Yet, occasional security incidents later on and domestic political bickering, coupled with the deterioration of the regional security conditions, prompted a deceleration in year-to-date growth by end-July.
- Locals continuing to drive the residential market with Beirut seeing growing share this year
The residential segment continues to account for the bulk of market activity, and has been largely driven by resi-dents seeking to acquire a property to actually live in it. These have a genuine need for lodging rather than acquir-ing a property as a pure investment aimed at booking capital gains in the future. While buyers have sought to go a bit farther and look for residences in Beirut's surrounding suburbs in recent years, the share of Beirut in total real estate sales value increased so far this year to 29% relative to 25% of total sales value in 7M 2013.
- Supply side adjusting to new demand trends with smaller apartment sizes
The newly established reality in the real estate market, that of sluggish demand and relatively flattish prices (albeit with some discounts granted to buyers) amid a tough operating environment, has forced the supply side of the mar-ket to adapt to changing dynamics. Developers have had to get accustomed to buyers' lower appetite for purchases and review their upcoming projects to better match new demand trends. Housing units of less than 150 sqm saw their share in total newly issued residential permits rise from 44% in 2010 to around 61% in 2013, thus strongly reflecting the shift towards smaller size apartments.
- BDL policies and bank financing supporting realty demand
Amid the property demand slowdown of the past three years, the BDL provided both in 2013 and 2014 stimulus packages aimed at supporting the domestic economy in general and the realty sector in particular through subsi-dized loans encouraging some Lebanese to finalize buy contracts. The incentive packages came amid a tough do-mestic and regional environment, and aimed at favoring demand for housing at a time of market activity slowdown while maintaining healthy lending growth. This complemented efforts on behalf of banks deployed over the past few years and aimed at catering to the buyers' growing funding needs amid a widening structural gap between their purchasing power and apartment prices.
- Upward price movements only possible in the event market activity picks up noticeably
Upcoming local political milestones, such as the Presidential and legislative elections, and security forces' success in their efforts to contain drifts in some areas are likely to be key determinants of the activity and performance of the real estate industry in the near future. In the event the political and security climate does not improve, the cur-rent situation is likely to be prolonged and the market would be apt to witness slight downward price pressures. In the event the politico-security situation improves and milestones go smoothly, the market in its various components is likely to see some upward movements in prices from current levels provided market activity picks up noticeably. ”
Source: Bank Audi - Lebanon Real Estate Sector Research - Sept 2014